The 2pm train from Heuston to Cork is hurtling through Tipperary on a glorious Friday afternoon in April, and I am struck by just how empty the country is. With a better transport system, such as French-style fast commuter trains, most of the main conurbations of Ireland could be accessed east to west and north to south in less than an hour. French TGVs travel at an average speed of 200 miles per hour meaning that Dublin to Cork, a distance of 157 miles, could be done in about 45 minutes. Belfast to Cork could be done in under an hour and half, while Dublin to Galway would be just over 30 minutes.
With a train system like this, there would be no housing crisis because we would all be living in what would feel like, in terms of commuting, a big suburb.
This should be the objective of the country, irrespective of what government is in power, because a society that can travel around efficiently and in comfort is a society that’s going places. Look at the most sophisticated societies around the world: they are all characterised by clean, efficient, democratic transport systems. The reason for this is that such systems bring down the cost of land and housing, offering in effect a subsidy to business because basic costs of production are lowered.
This drives productivity upwards.
Now the reason all of this is important, is because this week we received two very important documents that tell us what is going on in our society.
The first is the census, which is a reason for celebration. The population is rising and heading back to pre-famine levels. This is great news. A rising population in a rich country tells you all you need to know about the economy. In a world of birth control, people have kids when they are confident about the future. Also, rising migration – another acid test for success – reveals that lots of people are moving in and out of the country. This is a good sign.
Unfortunately, far too many people live in the baby belt — a giant arc which stretches from Drogheda in the North, to Mullingar, towards Port Laoise, down to Carlow and reaching the sea at Arklow. This has to stop and will only do so if there is an efficient transport system. Interestingly, when you compare the levels of population to famine times, the most extraordinary aspect is the fact that rural Ireland, now denuded of people, was full. There were twice as many people living in County Cork than in the whole of Dublin. Now Dublin is ten times bigger than metropolitan Cork. Such a degree of centralization is unheard of in modern western societies. But it won’t change on its own because there is a tendency for economic activity to cluster around large, dominant cities.
But a massive programme of investment in rail, to compliment the investment in motorways, would change this reality, and quickly.
Talk of investment brings us to the second important set of figures released this week: the upbeat economic forecasts from the central bank. Regular readers will know that this column has been highly optimistic about the economy for some time now. It’s interesting to see the normally cautious central bank getting giddy now, particularly as it went out on such a limb suggesting Brexit would hole the economy below the water line last year.
The central bank’s chief economist Gabriel Fagan, a very fine economist with a sense of humour as sharp as his intellect (I worked with him many years back), described the rapid recovery in the economy as being similar to emerging market countries that recover rapidly from financial meltdowns. The term is a “Phoenix Recovery” and it describes a recovery that happens in the absence of debt and credit.
We’ve been arguing this here for some time, observing that the economy is growing remarkably strongly without commensurate borrowing. This is an extremely healthy place to be because, more than anything else, it means there is no bubble building, even in the housing market.
There may be a bubble in the Dublin commercial market because those prices have been driven skywards by foreign funds that are using money borrowed abroad or as investments by leveraged rich foreigners looking for returns in Ireland. Counter-intuitively, if there is a crash in Dublin’s commercial market it will be good for “Ireland Inc” as prices would fall without the knock-on to Irish wealth, because Irish balance sheets are not exposed there in any material sense. But you’d be mad to chase this market up at these levels because you are just giving foreign investors an exit strategy.
However, in the general economy the level of new debt is low (and very low for this new level of growth), which means growth is coming through income and productivity – i.e. we are getting more from less.
We see similar developments in emerging economies like Argentina, Korea, Mexico and Thailand after they all experienced something like an economic coronary arrest. The same thing happened here. In 2008 capital not only stopped flowing into the country but flowed out rapidly. This caused what economists refer to as a “sudden systemic stop”. But very quickly the economy recovers. The idea is that companies that had lots of access to credit suddenly become much better at operating without overdrafts in the slump. Your mother would describe this as “cutting your cloth”.
Form here, I believe the economy will grow rapidly and for some time. The reason is that Ireland isn’t really a domestic economy in the true sense of the word, rather we are a part of the global corporate supply change. As long as the world economy is motoring, and it is, we will do well. We just need to remain competitive. This means massive investment in public infrastructure, like trains and education. We are now a high wage, high skill economy. We can’t go backwards. We must go forward.
International capital is our life-blood and international capital is like water – it goes to the place of least resistance. The way you ensure that we don’t get caught out again is by making sure the banking system is kept in check. This means hawk-like vigilance about over borrowing. Once we do that, in effect minimizing the damage we can do locally, there are more than enough positives in the economy as a global place for production, capital and trade, to make the future look rosy.
In fact, taken together with the census, once we realize that Ireland is part of the global supply chain, rather than an autonomous economic entity, there’s no reason to believe that we can’t experience a golden-era ahead. And this is despite Brexit and Trump. By boxing clever now, there’s no reason to believe that this Phoenix must fall back to earth.
In fact, it can soar.
Quick draaaaaaawwww McGraaaaath Adam.
“Counter-intuitively, if there is a crash in Dublin’s commercial market it will be good for “Ireland Inc” as prices would fall without the knock-on to Irish wealth, because Irish balance sheets are not exposed there in any material sense. But you’d be mad to chase this market up at these levels because you are just giving foreign investors an exit strategy.”
Nothing more, nothing less. Finally someone has said that.
David are you suggesting that people should commute from Galway or Cork to Dublin?
David – in this country we use the metric system. In France they use the Metric system. So why when talking about the speed of a TGV do you convert it to miles? I know you’re keen on the “anglosphere” but come on…. The Canadians and Aussies don’t seem to have a problem with it…
And I guess California generally, and in particular Silicon Valley and the San Francisco Bay Area can’t be classes among “the most sophisticated societies around the world” as the public transport systems are pretty crap there.
Hi, The bit about the train isn’t well thought out. If you built a train to Sligo would you have enough people using it to get an ROI? No. It would need to be part of an overall strategy. “With a train system like this, there would be no housing crisis “ Yes there would; people still don’t want to live in rural Roscommon. “The reason for this is that such systems bring down the cost of land and housing” Really where? Prices for property rose along the luas etc. “Also, rising migration – another acid test for success – reveals… Read more »
David,
Ordinarily, I have a lot of time for your column. But to suggest that we should have bullet trains running up and down and across this Country is stretching it a bit toooo far. There isn’t the demand for the that kind of service in rural Ireland.
Aren’t Irish Rail in trouble as it is carrying passengers for free on our mainline services while the trip isn’t able to get enough paying passengers to pay for the diesel!
You come with some good ideas, David. this just ins’t one of them.
“However, in the general economy the level of new debt is low (and very low for this new level of growth), which means growth is coming through income and productivity – i.e. we are getting more from less.”
Quite so.
http://www.irishexaminer.com/ireland/personal-debt-has-doubled-to-danger-levels-395187.html
https://data.oecd.org/hha/household-debt.htm
David, I remember thinking exactly the same thing when I lived in Japan for a bit. 300kmph Shinkansen running every 10 minutes between all major cities is how it works there. Tgat would entirely transform living and working in Ireland. The only thing that’s different now is that China Rail effectively stole the designs for a bullet train from Kawasaki Heavy a few years ago, so we wouldn’t even have to pay Japanese (or French) prices. While the Chinese are here building out the network, get them to throw up a couple of fourth or fifth generation nuclear plants to… Read more »
Sorry, David, but I have to disagree with what you’ve stated in your latest blog. The prognosis is promising, but for who though? It’s certainly not promising for the ordinary man and woman on the street and my reason for stating that is down the ‘dumbing down’ mentality of most of the employers in Ireland. They want people to work all the hours that God has created for half nothing and even then they’re not satisfied!! They’re constantly pleading the ‘poor mouth’ when it comes to pay and conditions while at the same time they’re living the ‘high life’. Where… Read more »
The reason why this bubble will burst wont be the same as the last time. It will be because supply catches up with to or exceeds demand. In the old bubble anybody could buy a house, you could pop in with your 20K salary and 40K bonus ( verbally agreed to) and get a ten times income house of 600k. There was some panic but very little about people being priced out because the banks kept offering higher multiples of income, and 100% mortgages, and so on. Every year, new deals. Also wages did in fact increase in those years.… Read more »
David – thank you !
We have a productivity problem, with regard to settlement, work, and the travel time between both.
Large parts of Ireland are not economical for trains. But they could provide feeder buses to train transport hubs like Galway, Portlaoise, Mullingar, Kilnenny, etc.. Or car transport, park-n-ride.
We are not good at building efficient infrastructure. And we need to review this. As a result we pay a fortune in labour and consumption taxes, and have little or no infrastructure.
A great fable worthy of Hans Christian Anderson.
Why?
Because once upon a time the civil servants, gardai, teachers and nurses were patriotic and had the good of Ireland at heart.
That was before the evil witch “greedygut” and her minions like president to be, Bertie and his band of fixies friends joined forces and the digout was born.
Infrastructure should be designed to create the future.
Dublin IS too big.
We need to plan a new city in the west and then a TGV might make sense
You need the trains occupied going in both directions
Etc etc etc – dream on.
“A rising population in a rich country tells you all you need to know about the economy. In a world of birth control, people have kids when they are confident about the future.” Ah David, this is sloppy. Did you not read the census? Plus, you are guilty of conflation. The head lady from the CSO was on the radio, here’s four points that grabbed my attention alas I can’t remember the actual percentages. In comparison between this new census and the previous 1) The year-on-year birth rate has declined 1) More Irish people left than returned 3) The Irish… Read more »
“Such a degree of centralization is unheard of in modern western societies.” What you say is certainly not true of S. Korea, where about half the 50m population live in the huge Seoul-Incheon urban complex. This has a lot to do with trading facilities like airports and container ports, which your article ignores. Of course Korea has fantastic road and rail links all over the country – and the terrain, unlike ours, is covered in hills and mountains. But no one wants to live near these facilities. They mostly live in high rises, and often need strong barriers to keep… Read more »
The problem with public transport in Ireland, is that before ever gets to the point of achieving economies of scale the Brendan Ogle factor looms on the horizon to destroy that option.
Have we reached the point of Peak Netherlands Debt ? http://www.zerohedge.com/news/2017-04-10/its-not-war-crime-eu-finance-chief-attempts-defend-his-women-booze-outburst I am asking because, it is clear that the Dutch Labour Party politician, and former Fin Min (and head of the EU Fin Min group) has produced a spectacularly stupid statement. Basically, he has stated that the PIGIS, are in trouble because they are too busy enjoying themselves on wine and women. Now, anybody who has ever been to Spain, will see clearly that most deadly levels of alcohol consumed, is consumed by Northern Europeans on two week binges in the sun. And that is to say nothing about… Read more »
Well, it looks like the Irish Water debacle has entered a new stage.
It was difficult for FF/FG to avoid losing face.
Meanwhile the architect of the defining mess of the past 5 years, is in Brussels designing bigger and better…….
Several bubbles are now getting in a very frothy state. 1. Canadian real estate. And with it the CAN banking system. Throw in reckless provincial governments, like Ontario which has one of the highest public deficit of any similarly sized regoinal government in North America. More indebted than California or Illinois. 2. Aussie real estate. A mirror of the CAN real estate bubble. 3. Swedish real estate and banking. The idiots in charge of Sweden have done it again. Another boom built on leverage, and clueless assumptions. And they are once again in complete denial. The Swedish banking system is… Read more »
Yes, yes, yes David! Absolutely 100%. Dublin is a primate city, an elephant, multiple times the size of the next city contender, Cork. This phenomenon occurs in “small” countries. We are a small country but as you rightly point out, we have higher ambitions within reach: Through our 3.6m potential voters overseas (3.6m!!!!!) Through our empty landmass beyond the Pale, (an asset, not a liability – contrary to condescending media “treatment”) Through our fantastic young people Through our growing population Through our growing economy Through our global voice Through our (mostly sound) Western values But, we must get: Leadership Regional… Read more »
Maybe we won’t need a Water Board after all.
https://lofi.phys.org/news/2017-04-device-air-powered-sun.html
France is seeing a surge in support for a French version of Ruth Coppinger, or “how to bankrupt a country like Venezuela”. http://www.telegraph.co.uk/news/2017/04/14/jean-luc-melenchonpromises-no-red-army-tanks-france-wins-presidency/ He wants to spend 100Billion Euro on Green investment. No idea what that means. I reckon he does not know either. But Macron is using eco-buzzwords, so Melenchon has to out-shoot Macron. All of the candidates are “something for nothing” candidates, except Fillon who makes it clear that France has to undergo adjustment, and pain. He is in a similar position to Jacques Neckar, who also brought painful financial reforms before the French, only to have them… Read more »
Nay !
The prognosis is depressing.
And, that is because that is the way that The Dreadful Few want it to be.
.
.
Already we know that Trump is a RAT !
Seems that Premier Xi is too ;
Ref. comments attributed to him supporting the obvious false narrative of Syrian government doing chemical attack.
Syrian government did no such thing.
I remain skeptical of Putin ;
My skepticism is based on Putin’s links with the cult that the real ruler of USA — Mr. Jared Kushner [ Husband of Trump’s favorite daughter ( Ivanika ) ] honors.
https://www.henrymakow.com/2017/04/Putin-and-Trump-Following-End-Times-Blueprint.html
The concept of reality is not the concern of most people today. We imagine that government will be the provider of all, that the economy can be Managed and that our currencies are actually money. Nothing can be further from the truth and reality is biting back. Reality is rejected by the politicians, the bankers and the people they are talking to. May I introduce you to Hugo Salinas Price’s essay “When Reality overthrows imagination” “Now to get to the heart of perhaps the most important imaginary construct in which we live: money. Today, the world uses as money something… Read more »
Hi David. Nice upbeat article. Would you please tell your site admin that a new version of WordPress is available. Also my browser reports that your login page is insecure. More info here : http://tinyurl.com/j72fap9 Cheers
“The Prognosis is promising”, so says our host David McWilliams.
To speak of “prognosis” ==> the patient being afflicted by some ailment or disease.
So, why no “moral courage” from David [ Specialist & Professor ] to speak about the disease which is underlying the patient’s grave condition ?
After all, unless the parasite causing the disease is neutered, any upbeat declaration about the prognosis is rubbish-talk.
Here — courtesy of Chris Spivey’s blog — is a fluid educative history, from the pen of John Hammer, of the parasitic infection afflicting the patient ;
http://chrisspivey.org/john-hamers-in-the-beginning/
THE PROGNOSIS IS NEGATIVE ! Prognosis is WW 3. And just when Syrian government are winning against the parasite’s mercenaries, along comes Trump the RAT — Prior to president election, Kill-ary Clinton we knew for sure is evil ; Trump we only knew to be “bad” — with his false flag “chemical attack” [ alleged “chemical attack” ] on the Syrian populace so as to blame it on Syrian government & thus justify USA “openly” attacking Syria. False Flag: How the U.S. Armed Syrian Rebels to Set Up an Excuse to Attack Assad By The Daily Bell Staff April 08,… Read more »
David is big into “fixing” the world. “The Television Brain” complex has a “let’s fix the world” element about it ; Such is what I have noticed anyway. But, I posit that some matters require NO fixing for the prognosis to be more than promising, e.g. Irish State should NOT have “fixed” / soverigned / guaranteed the private debt of private banks ! i.e. Irish State should not have abided by David’s “Fix” for the private debt of the private banks. Instead, we should all have awaited 10 April 2017 for David — the master wordsmith [ an accolade much… Read more »
Very probable that Ahmadinejad is a “crypto” seeking to bring slaughter on Iran so as to please The Dreadful Few ;
Apr 12, 2017 11:49 AM
HEADLINE
Iran’s Ahmadinejad Goes Against Ayatollah, Formally Files to Run Against Rohani for President
INTRO
Ahmadinejad previously said he wasn’t going to run after Ayatollah Khamenei advised him not to, but many hard-liners seek candidate to stand up to Trump
read more: http://www.haaretz.com/middle-east-news/iran/1.782971
“The population is rising and heading back to pre-famine levels. This is great news.” No, No, No, No!!! It’s terrible news. Sure, it might be good for the economy, but it’s not good for the people who work in the economy, and surely that’s more important? I like living in a low-population-density country and county. I like the fact that I can: 1. Own a car. 2. Drive where I want, when I want, without huge traffic problems. Even if I’m going to the beach on a bank holiday weekend. 3. Park easily, and usually for free, when I arrive.… Read more »